CalPERS, the California pension system largely organized for the benefit of the state’s massive and powerful labor unions, is trying to stop the bankrupt city of San Bernardino from declaring bankruptcy. They’re trying to stop San Bernardino, which is out of cash, from declaring bankruptcy because San Bernardino has stopped paying millions into the CalPERS system, citing its fiscal shortcomings. The city owes about $5.2 million to CalPERS.
San Bernardino, wrote CalPERS, “raises a serious question of whether its underlying purpose has been merely to ‘buy time’ and ‘evade creditors.'” CalPERS claims that once San Bernardino declares bankruptcy, it has an advantage over its creditors including CalPERS.
San Bernardino, like other California municipalities, pays into CalPERS for its public employees. But like other California municipalities, it’s bankrupt – upside down, thanks to the cost of programs like CalPERS, which has an unfunded liability of at least $85 billion. By way of contrast, the entire deficit of the state of California is just $16 billion. The budget of the state is some $91 billion.
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